Thomas Hodgskin (1787-1869) — "Social Price" and Idle Ownership

Economic Social Cost, Social Cost Theory and Definition

Thomas Hodgskin was another labor theory of value supporter. Probably the biggest item to remember about Hodgskin was that he was vehemently against "idle ownership." In 1813, Hodgskin published An Essay on Naval Discipline where he literally hammers the practice of taking "from the daily labourer to give to the idle gentlemen." Later, in Travels in the North of Germany (1820), Hodgskin condemns both profit and rent calling them "legal robbery" because "capital is the produce of labour."

In similarity to Smith's "Cost of Production = wages + profit + rent," Hodgskin devised a price theory using a term he called the "social price" where the Social Price = wages + profit + rent (see Labour Defended against the Claims of Capital (1825)). For Hodgskin, since all value originated with labor, the "natural price" was based on wages only. Furthermore, the social price could only equate with the natural price if and only if workers and only workers were allowed to privately own capital or means of production. This implied that ownership of capital by those who did not produce was highly unnatural (see The Natural and Artificial Rights of Property Contrasted (1832)). Not surprisingly, the ideal society for Hodgskin was one in which income from idle ownership would be impossible.